Friday, 31 January 2020

OECD / G20 Inclusive Framework releases statement on two-pillar approach

The Inclusive Framework on BEPS (“IF”) members strongly support reaching a multilateral agreement with respect to Pillar One and Pillar Two as well as recognizing the concurrent work, on a without prejudice basis, on the two pillars. As a result, these members affirm their commitment to reach an agreement on a consensus-based solution by the end of 2020. In light of the above, the IF published a statement based on technical work provided by the Working Parties, as well as comments from the public consultation round and discussions at a number of Steering Group meetings. The IF has agreed upon an outline of the architecture of a Unified Approach on Pillar One which will serve as a basis for negotiations. Additionally, it welcomed the progress made on Pillar Two. This statement can be found at

Although they acknowledge that the timeline to reach a consensus as well as an agreed architecture on both Pillar One and Pillar Two is extremely challenging, the OECD believes they can move forward. To be able to commit to their anticipated timing, the OECD shared its timeline up to the end of 2020 in view of upcoming meetings.

ta newsflash oecd

With respect to the new taxing rights under Pillar One, as the OECD believes this is the primary response to the tax challenges of the digitalization of the economy, the statement mentions that it will be limited to large MNE groups (potentially taking into account the threshold of the CBC reporting – although we understand that the “in-scope revenue” could be considered and profitability threshold are also still on the table). However, it is envisaged that the new taxing right is being designed to work together with the arm’s length principle.

In view of Pillar Two, the IF states that significant work on key issues is advancing at a fast pace with good technical progress on many aspects of the GloBE proposal. However, a significant amount of work still remains to be done.

The OECD acknowledges that there are still many items that are subject to further discussion and analysis. Impact analyses are being done at the moment and further analyses will need to be performed in the coming year in this respect. The OECD recognizes that the impact for countries and also the economy in general should be thoroughly assessed, but indicates that this can be done coinciding with further discussions in order not to slow down the progress and anticipated timeline.

IF members reaffirm their commitment to bridge the remaining differences and reach agreement on a consensus-based solution by the end of 2020, noting that this agreement will depend on the further concurrent work which will be carried out on the two pillars. An important step will be its next meeting in early July, at which it is intended to reach agreement on the key policy features of the solution which would form the basis for a political agreement.

We will provide you with a detailed analysis on the statement in the weeks to come. In case you would have questions with respect to the above, do not hesitate to contact us.

Andy Neuteleers - Partner (

Kenny Van Tulder - Sr. Manager (